Estee Lauder Companies Inc (EL)
Liquidity ratios
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 1.30 | 1.39 | 1.46 | 1.60 | 1.84 |
| Quick ratio | 0.82 | 0.90 | 0.88 | 0.96 | 1.26 |
| Cash ratio | 0.54 | 0.60 | 0.65 | 0.68 | 0.94 |
The liquidity ratios for Estee Lauder Companies Inc. demonstrate a declining trend over the analyzed period from June 30, 2021, to June 30, 2025.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 1.84 in 2021 to 1.30 in 2025. While still above the generally accepted threshold of 1.0, indicating adequate liquidity, the downward trajectory suggests a gradual reduction in short-term financial cushion.
The quick ratio, or acid-test ratio, reflects the company's capacity to meet its short-term obligations using its most liquid assets (excluding inventory). It declined from 1.26 in 2021 to 0.82 in 2025. This indicates that the company's most readily available assets are less capable of covering immediate liabilities over time, approaching the critical threshold of 1.0, thus signaling a tightening of liquidity.
The cash ratio, which measures the extent to which current liabilities are covered solely by cash and cash equivalents, also showed a consistent decrease from 0.94 in 2021 to 0.54 in 2025. This decline signifies that cash holdings relative to short-term liabilities have diminished, potentially impacting the company's capacity to respond swiftly to sudden liquidity needs.
Overall, the trend across all three liquidity ratios indicates a gradual erosion of Estee Lauder’s short-term liquidity position over the observed years. While currently remaining above critical levels, the consistent declines suggest a need for vigilant liquidity management to maintain financial flexibility and ensure operational stability.
See also:
Additional liquidity measure
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 95.46 | 101.03 | 138.00 | 126.62 | 115.71 |
The cash conversion cycle (CCC) of Estee Lauder Companies Inc has displayed notable fluctuations over the analyzed period from June 30, 2021, to June 30, 2025.
In the fiscal year ending June 30, 2021, the CCC was measured at 115.71 days. This figure increased significantly in the subsequent year, reaching 126.62 days by June 30, 2022, indicating a lengthening of the operating cycle, possibly attributable to extended inventory holding periods or delays in receivables collection.
The upward trend persisted into the 2023 fiscal year, with the CCC reaching 138.00 days, the highest within the observed timeframe. This suggests that the company's overall liquidity cycle was elongating, potentially reflecting increased inventory turnover times, extended receivables days, or both.
However, a remarkable shift occurred by June 30, 2024, when the CCC contracted sharply to 101.03 days, implying an improvement in the efficiency of working capital management—either through faster inventory turnover, more prompt receivables collection, or a combination of both. This downward trend continued into the subsequent year, with the CCC further reducing to 95.46 days by June 30, 2025.
Overall, the trend indicates periods of cyclical operational efficiency, with a pronounced peak in 2023 followed by substantial contractions in 2024 and 2025. The shorter CCC in the latter years reflects an improved management of working capital components, which could enhance cash flow performance and reduce financing needs.